Mattel 2015 Annual Report Download - page 14

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Item 1A. Risk Factors.
(Cautionary Statement Under the Private Securities Litigation Reform Act of 1995)
Mattel is including this Cautionary Statement to make applicable and take advantage of the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 (the “Act”) for forward-looking statements. This Annual Report on Form 10-K
includes forward-looking statements within the meaning of the Act. Forward-looking statements can be identified by the fact
that they do not relate strictly to historical or current facts. They often include words such as “believes,” “expects,”
“anticipates,” “estimates,” “intends,” “plans,” “seeks,” “aims,” “estimates,” “projects,” “on track,” or words of similar
meaning, or future or conditional verbs, such as “will,” “should,” “could,” or “may.” A forward-looking statement is neither a
prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Investors
should not place undue reliance on the forward-looking statements, which speak only as of the date of this Annual Report on
Form 10-K. These forward-looking statements are all based on currently available operating, financial, economic and
competitive information and are subject to various risks and uncertainties. The Company’s actual future results and trends may
differ materially depending on a variety of factors, including, but not limited to, the risks and uncertainties discussed below.
Mattel expressly disclaims any obligation to update or revise any forward-looking statement, whether as a result of new
developments or otherwise.
If Mattel does not successfully identify or satisfy consumer preferences, its results of operations may be adversely
affected.
Mattel’s business and operating results depend largely upon the appeal of its toy products. Consumer preferences,
particularly with children as the end users of Mattel’s products, are continuously changing. Significant, sudden shifts in demand
are caused by “hit” toys and trends, which are often unpredictable. Mattel offers a diverse range of products for children of all
ages and families that includes, among others, toys for infants and preschoolers, girls’ toys, boys’ toys, youth electronics, digital
media, hand-held and other games, puzzles, educational toys, media-driven products, and fashion-related toys. Mattel competes
domestically and internationally with a wide range of large and small manufacturers, marketers and sellers of toys, video
games, consumer electronics such as tablets and mobile devices, and other play products, as well as retailers, which means that
Mattel’s market position is always at risk. Mattel’s ability to maintain its current product sales, and increase its product sales or
establish product sales with new, innovative toys, will depend on Mattel’s ability to satisfy play preferences, enhance existing
products, develop and introduce new products, and achieve market acceptance of these products. These challenges are
intensifying due to trends towards shorter life cycles for individual toy products, the phenomenon of children outgrowing
traditional toys at younger ages, and an increasing use of more sophisticated technology in toys. If Mattel does not successfully
meet the challenges outlined above in a timely and cost-effective manner, demand for its products could decrease, and Mattel’s
revenues, profitability and results of operations may be adversely affected.
High levels of competition and low barriers to entry make it difficult to achieve, maintain, or build upon the success of
Mattel’s brands, products, and product lines.
Mattel faces competitors who are also constantly monitoring and attempting to anticipate consumer tastes, seeking ideas
which will appeal to consumers and introducing new products that compete with Mattel’s products. In addition, competition for
access to entertainment properties could lessen Mattel’s ability to secure, maintain, and renew popular licenses to entertainment
products developed by other parties and licensed to Mattel or require Mattel to pay licensors higher royalties and higher
minimum guaranteed payments in order to obtain or retain these licenses. In addition, the barriers to entry for new participants
in the toy products industry are low. In a very short period of time, new market participants with a popular product idea or
entertainment property can become a significant source of competition for Mattel and its products. If demand for Mattel’s
brands, products and product lines is reduced as a result of these factors, Mattel’s results of operations may be adversely
affected.
Inaccurately anticipating changes and trends in popular culture, media and movies, fashion, or technology can
negatively affect Mattel’s sales.
Successful movies and characters in children’s literature affect play preferences, and many toys depend on media-based
intellectual property licenses. Media-based licenses can cause a line of toys to gain immediate success among children, parents,
or families. Trends in media, movies, and children’s characters change swiftly and contribute to the transience and uncertainty
of play preferences. In addition, certain developments in the entertainment industry, including labor strikes, could cause delay
or interruption in the release of new movies and television programs and could adversely affect the sales of Mattel’s toys based
on such movies and television programs. Mattel responds to such trends and developments by modifying, refreshing, extending,
and expanding its product offerings on an annual basis. If Mattel does not accurately anticipate trends in popular culture,
movies, media, fashion, or technology, its products may not be accepted by children, parents, or families and Mattel’s revenues,
profitability, and results of operations may be adversely affected.